## Facts

- Three Buoys Houseboat Vacations U.S.A., Ltd. chartered houseboats on the Lake of the Ozarks, a man-made lake located entirely within Missouri and separated from the Osage River by a dam that blocks passage to interstate waterways.
- On August 2, 1987, a Three Buoys service vessel responding to a service call collided on the lake with a houseboat not chartered from Three Buoys.
- The collision caused two deaths, multiple injuries (including to a Three Buoys employee), and the sinking of the Three Buoys vessel.
- Multiple wrongful-death, personal-injury, and property-damage suits were filed against Three Buoys in Missouri state court.
- Three Buoys filed a federal limitation-of-liability petition under the Limitation of Liability Act, seeking to limit liability to the post-casualty value of the vessel and freight (or a statutory minimum).

## Issues

1. Whether the Lake of the Ozarks constitutes “navigable waters of the United States” sufficient to support federal admiralty jurisdiction over the collision.
2. Whether the Limitation of Liability Act, by itself, supplies federal question jurisdiction when admiralty jurisdiction is absent.
3. Whether a vessel owner may invoke the Limitation of Liability Act in federal court for a casualty occurring entirely on non-navigable waters.

## Decision

- The court held there was no admiralty jurisdiction because the Lake of the Ozarks, cut off by a dam and not part of a continuous interstate waterway, is non-navigable for admiralty purposes.
- The court held the Limitation of Liability Act does not create independent federal question jurisdiction; it presupposes an underlying admiralty case.
- The court affirmed dismissal of the limitation petition, clarifying the proper basis was lack of subject-matter jurisdiction rather than failure to state a claim.

## Legal Principles

- Admiralty tort jurisdiction requires that the incident occur on waters that are “navigable” in the admiralty sense; an intrastate, landlocked lake blocked from interstate waterways by a dam is not navigable for this purpose.
- The maritime “nexus” analysis described in Supreme Court precedent does not eliminate the separate requirement that the tort occur on navigable waters.
- The Limitation of Liability Act is a substantive maritime remedy dependent on admiralty jurisdiction and does not, standing alone, confer jurisdiction under 28 U.S.C. § 1331.
- When neither admiralty jurisdiction nor another independent jurisdictional basis exists, the federal court must dismiss the limitation proceeding for lack of subject-matter jurisdiction.

## Conclusion

The Eighth Circuit concluded that a limitation proceeding could not proceed in federal court because the collision occurred on non-navigable waters and the Limitation of Liability Act did not independently supply federal jurisdiction, requiring dismissal for lack of subject-matter jurisdiction.


In re Three Buoys Houseboat Vacations U.S.A., Ltd., 921 F.2d 775 (8th Cir. 1990)